Despite the strong headwinds of the COVID-19 pandemic, Mayo Clinic tallied "stronger than expected" financial results for the second quarter, taking in $3.22 billion in revenue, with a net operating income of $154 million.
Compared to the same quarter ending on June 30 in 2019, revenue was down 6.1% from $3.43 billion.
Mayo Clinic publicly reported these numbers in its “Unaudited Condensed Consolidated Financial Reports” for the second quarter and the first six months of 2020, filed with the Municipal Securities Rulemaking Board.
The net medical revenue for the second quarter was $2.42 billion, down 16.2% from $2.89 billion in the same quarter in 2019. Mayo Clinic’s investments fared better, with $124 million total for the quarter, an increase of 39.3% from $89 million in 2019.
In the report, Mayo Clinic acknowledges a variety of external financing sources as well as $300 million in savings from cost-reduction steps, including salary reduction and staff furloughs. The furloughs and pay cuts reduced Mayo Clinic’s tally of a workforce of almost 70,000 full-time equivalents by 9,800 in May and 8,600 in June.
“This performance spanned a remarkable period that included the near closure of outpatient clinical practice and a deferral of all elective and non-emergent care in April, the rapid reopening of the practice in May, and stabilization at near normal levels of volume in June,” wrote Mayo Clinic officials in the report. “Mayo Clinic received federal and state relief funding of $303 million during the second quarter, recognizing $173 million of the funds as revenue and deferring recognition of the remainder until the longer-term financial impact of the pandemic and the need for relief is better understood.”
The Centers for Medicare & Medicaid Services provided Mayo Clinic with $915 million in advanced payments in April. Mayo Clinic repaid that amount on July 16.
Mayo Clinic received $303 million from “various provisions in the Coronavirus Aid, Relief and Economic Securities Act of which $173 million has been recognized as other revenue in the condensed consolidated statement of activities.”
“While there are considerable unknowns in the months ahead, if our strong performance persists we may consider returning some portion of the CARE Act funding… This decision, rooted in our values of integrity, teamwork and stewardship, would allow for these dollars to be directed to other needs in support of the nation’s pandemic response,” according to the report.
In April, Mayo Clinic also entered into a five-year bank loan of $100 million at 1.8% “in addition to a $100 million line of credit for general operating purposes.”
Following those steps, Mayo Clinic issued $100 million in bonds with a 1.99% fixed rate of interest in Mayo. The interest on those bonds is due in 2027.
“The proceeds of the bonds will be used for general corporate purposes,” the report states.